Africa Key Petroleum Wax Markets Anticipate More Growth

Africa’s key oil and gas markets of Algeria, Ghana, Nigeria and Ivory Coast have been touted as the leading growth drivers of the continent’s petroleum wax market fueled by demand from consuming sectors such as coatings and polishes, packaging, candle making, tire and rubber.

A new report by market intelligence firm, Transparency Market Research (TMR), has projected the size of the petroleum wax market, comprising paraffin wax, microcrystalline wax and petroleum jelly, in the four African countries to be about $71 million in 2019 with revenues likely to grow to $120 million by 2030 if the projected compound annual growth rate of (CAGR) five percent is maintained for the next 10 years.

“Among the (petroleum wax) types, the petroleum jelly segment held a dominant share of the petroleum wax market in Algeria, Ghana, Nigeria and Ivory Coast in 2019, primarily due to high demand from industries such as cosmetics and pharmaceutical,” the report said.

Petroleum jelly, which some consumers use in coating for corrosion-prone products such as metallic trinkets, non-stainless steel blades, is also useful for the protection and operation of equipment in the marine, leather, telecommunications and manufacturing sectors. Experts say it is preferred in these sectors because of its strength as “an excellent anti-rusting agent and water repellant.”

Nigeria, which reportedly produced an average of two million barrels of crude per day between 2015 and 2019 and is also Africa’s top oil exporter earning up to 90 percent of its foreign exchange earnings from crude oil sales, has the largest share of the petroleum wax market ahead of the other three countries and expects further expansion “at a substantial pace during the forecast period, owing to significant investments in the cosmetics & personal care industry in the country.”

“Nigeria dominated the Algerian, Ghanaian, Nigerian and Ivory Coast petroleum wax market in 2019, owing to growth in industrialization and rise in the disposable income of consumers in the country,” said TMR.

Separately, the Central Bank of Nigeria said the country’s industrial sector, a key driver in the growth of petroleum wax, “showed an improvement in the fourth quarter of 2019, on account of continued expansion in manufacturing activities.”

However, with Nigeria, like the rest of the world, staring at possible negative growth, and a gloomier economic outlook due to the COVID-19 pandemic, global professional services provider, PricewaterhouseCoopers (PWC) said disposable income for Nigerian consumers may remain depressed in the near term because of “the economic contraction.”

In neighboring Ivory Coast, public and private sector investment in the country’s midstream and downstream oil and gas sector, especially crude processing, is expected to drive up demand for petroleum wax, according to the TMR report.

However, other analysts have pointed out such an investment is possible if the country liberalizes its midstream and downstream oil and gas market, especially crude refining and gas processing, which is currently dominated by Société Ivoirienne de Raffinage (SIR), Cote d’Ivoire’s only oil refinery.

Last year, the SIR oil refinery, currently the largest in French-speaking West Africa, secured a $660 million loan to support its debt reduction efforts and also achieve security of crude supply.

“Should the market for these products be fully liberalized, there will be significant opportunities for U.S. companies,” said a previous report by the U.S. Department of Commerce on Cote d’Ivoire – Oil/Gas Field Equipment.

Meanwhile, some of the petroleum wax producers such as ExxonMobil Corporation and Sasol have recently unveiled investments in their performance chemical segments hence expanding further Africa’s overall wax market.

For example, TMR cited the example of the 2017 launch of the semi-refined petroleum wax product, Waxrex 1280, by ExxonMobil, which the company said was “a lower-range melting point semi-refined paraffin wax.”

“It is derived from petroleum via a carefully controlled refining process to provide low color and controlled oil content and meets the requirements for most industrial wax applications and Food and Drug Administration standards for indirect food contact substances,” said ExxonMobil on the Waxrex 1280.

Furthermore, the company described the petroleum wax product as “a translucent crystalline material in the solid-state and is water-white in color and low in viscosity when molten and composed mainly of normal, straight-chain paraffin hydrocarbons that impart properties of water repellency.”

Elsewhere, the South Africa-based global chemical giant Sasol in 2017 announced the completion of an $871 million FT Wax Expansion Project in South Africa for the production of hard waxes, medium waxes, liquid paraffin and waxy oils.

Completion of the project propelled South Africa to the top league of global wax producers targeting the production of “premium waxes that offer unique properties and superior performance for our customers” according to a previous company statement.

Sasol said the facility’s hard waxes would be supplied to market segments including “hot melt adhesives, PVC processing, inks, paints, coatings, and asphalt applications.”

For medium waxes, Sasol is targeting demand from consuming markets such as “candle markets and emulsions in the manufacturing of construction boards.”

Other players in the African petroleum wax market include Sonneborn LLC. Sasol, Kerax Limited, Exxon Mobil Corporation, Honeywell International Inc., Orbichem, H&R GROUP, RDR Energy, ZA PETROCHEM (PTY) LTD, and Brenntag Asia Pacific Pte Ltd.